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Beazer Homes USA Inc. (BZH)

I was watching the housing stocks back in August and
September of 2007 when they were falling to new lows everyday but switched out
of the industry in favor of banks, autos and financials. But after seeing an
old name reaching a new low after-hours, I started to re-examine the old names.

Still Going Lower

I shouldn’t
have been surprised but all the housing names that I had been short but got out
of during short squeezes are pretty much all much lower now. Stocks like DR
Horton (DHI), Lennar (LEN), Centex (CTX) and Beazer Homes all reached new 52
week lows today.

Beazer Homes
Worthless

One of my
favorites over 9 months ago was Beazer Homes and this stock has fallen so far
that there is barely any market capital left. And the analysts that cover the
company are predicting incredible losses in the current quarter, the next
quarter, the current year and the next year. A loss of 13.24 is now predicted
for the current year. This is down from an expected loss of 5.14 from the same analysts
90 days ago.

Shorted and Shorted
Some More

Beazer
Homes is shorted by almost everyone. 63.20% of the outstanding stock is now
short. Down 81% over the past year, the stock still could pop on a short
squeeze but over the next 3 months, the company is not going to do well and the
stock will continue to fall.

Option Trades are
Still Possible

The final
note on Beazer Homes that I noticed from analyzing some of the data on the
stock and the company is that options are still possible trades. Often when I
company reaches a point where it’s close to bankrupt, the options don’t outperform
the stock and shorting the stock makes more sense if you can find shares to
short. But the action today in the options shows that you can purchase Puts in the
month of August at a strike price of 5 and make more money on the options than
from the stock itself. As the stock fell 10% today the August 5 Puts rallied
28%.